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April 17, 2015

Oregon towns won't wait for Google Fiber, start building their own gigabit networks

Google Fiber is fast, but a handful of Portland suburbs want to move faster.

Some of the same Oregon cities Google is eyeing for its speedy Internet service are contemplating building their own networks.

Hillsboro, Lake Oswego, Gresham and West Linn are at various stages of assessing how they might commission their own fiber-optic networks, which they hope would upgrade Internet speeds and hold down costs for residents and businesses.

They're following the path of smaller cities across the state that have already built their own networks to boost connection speeds, largely in communities the big companies have overlooked.

Most of Portland's suburbs already have at least two options for broadband service, and might get more if Google Fiber arrives with its gigabit connections - 25 times faster than the minimum broadband threshold.

But at least a few cities wonder if they couldn't do it better - or at least more affordably - than Google Fiber.

"They may be a benign company but they would still be a monopoly," said Lake Oswego city manager Scott Lazenby. "And monopolies charge what they can."

Municipal telecom service is a contentious issue nationally. Big cable TV and Internet companies have pushed legislation in multiple states that would prevent local governments from going into the business themselves.

No such proposals are moving forward in Oregon. The FCC voted in February to invalidate such laws, concluding they are more likely to restrict broadband access than improve it. But telecom companies still oppose local governments competing with private businesses.

"We're supportive of public-private partnerships where tax dollars aren't competing against private investment capital," Comcast said in a written statement. "In general, cities have extensive needs like roads, police, parks and community development, and we think especially in times of fiscal tradeoffs that taxpayer money should be focused on those needs rather than competing with the private sector."

For its part, Google Fiber said the cities' exploration of municipal fiber will have no effect on its ongoing exploration of the Portland market.

"Increasing local choice for super high-speed broadband is a good thing for communities," the company said in a written statement.

In Oregon, municipal telecom has a troubled history dating to Ashland's difficult foray into the market in the late 1990s. The Ashland Fiber Network didn't come close to covering the city's costs and was undercut by Charter Communications' cable TV business. The service still operates but it has split off its TV service.

Sandy issued a $7 million, 20-year bond to bury 43 miles of fiber connecting 3,500 homes in the city, 20 miles southeast of downtown Portland. It began offering Internet service last October.

"We realized we're too small for Google to come to us," said SandyNet general manager Joe Knapp.

Budget plans called for signing up a third of the city initially, growing to 50 percent over several years. But Knapp said well over 50 percent of the homes in the city have already come aboard.

SandyNet charges $40 a month for Internet connections of 100 megabits per second, four times faster than the national broadband standard. Comparable service from Comcast in the Portland area is more than $100 a month.

SandyNet also offers gigabit service that matches Google Fiber for $60 a month, $10 less than what Google charges in its first markets. Sandy doesn't offer cable TV service yet, but plans to contract with another company to provide it over the fiber network.

Sandy's network is less than six months old, so it's too soon to know how it will perform over time. But public officials in other Oregon cities say they've noticed its early appeal, and Knapp said that he thinks Sandy's approach could work elsewhere.

"I think it's very doable in larger cities," he said.

Maybe. But larger communities would face a different set of challenges.

Sandy is very small area - "We're practically like a neighborhood in Portland," Knapp said - so it's much less expensive to run fiber to all the homes. And SandyNet has tepid competition from a small cable TV operator called Wave and low-end Internet service from Frontier.

In the Portland area, Comcast, Frontier and CenturyLink have all boosted their Internet speeds in the past year and would surely fight to hold their markets. On Friday, Comcast said it plans to eventually upgrade nearly its entire service territory to gigabit service - and bring 2 gigs to many customers.

Additionally, Google Fiber could decide within the next several weeks whether to serve Portland and five close-in suburbs: Gresham, Tigard, Lake Oswego, Beaverton and Hillsboro.

Portland contemplated building its own fiber network in 2007 but ruled it out after seeing the price tag: nearly half a billion dollars. Portland now estimates that a Google Fiber network - which might not serve the whole city - would cost $300 million.